Chapter 9 - The Railway

The Railway and Early Industrialization

Importance of Railways in British North America (BNA)

1. Role of Railways

   • Railways were crucial in BNA due to the long distances involved in transportation.

   • Compared to canals, railways offered several advantages:

     • Accessibility: Railways could reach areas beyond natural waterways, making them more versatile.

     • Winter Resilience: Unlike canals, railways were relatively unaffected by harsh Canadian winters.

     • Speed: Railways provided faster transport than traditional water transport.

     • Safety: Goods transported by rail were less likely to be damaged compared to those moved by water transport.

   • Cost: While offering many advantages, railways were significantly more expensive than canals, presenting a barrier to investment. The high costs limited speculative capital available in the colonies to undertake railway construction ventures.

Development of Canals and Railways (1840s-1850s)

2. Continued Focus on Canals

   • During the 1840s, canals remained the primary focus for transportation in Canada, while the neighboring US expanded its railway network.

   • By 1850, British investment in BNA increased due to the successes enjoyed by the Industrial Revolution in Britain, generating higher incomes and greater attractiveness for overseas investments as domestic opportunities dwindled.

3. Government Initiatives

   • The Canadian government recognized the need to attract private investment in railways and implemented the 1849 Railway Loan Guarantee Act:

     • This Act guaranteed the interest on bonds issued by railway companies if they met specified conditions.

     • Provincial governments offered credit to municipalities that wished to invest in rail infrastructure.

4. Railway Boom (1850-1857)

   • The railway boom was funded by a mix of British capitalists, private Canadian investors, US sources, and municipal funding.

   • Major railway projects completed during this boom included:

     • St Lawrence & Atlantic Railway: Connected Montreal to Portland, Maine, completed in 1853.

     • Great Western Railway: Linked Niagara to Hamilton, London, and Detroit, completed in 1855.

     • Ontario, Simcoe & Lake Huron Railway: Connected Toronto to Collingwood, completed in 1855.

   • The Grand Trunk Railway, the most substantial and ambitious project, extended from Quebec City to Sarnia, completed in 1859, costing approximately $67 million, primarily funded by British capital and engineering expertise.

Challenges in the Maritimes

5. Financial Difficulties

   • The smaller Maritime colonies faced significant challenges in financing railway construction. Proponents of the railway aimed to:

     • Strengthen the economic positions of Saint John and Halifax within their hinterlands.

     • Establish the Maritimes as a trade entrepot between BNA and Europe, necessitating construction of a trunk line through US territory.

   • However, Britain was not willing to finance a railway line through US territory, leading to conflicts between Nova Scotia (NS) and New Brunswick (NB) over route planning.

   • By 1867, the Maritimes had only approximately 600 km of operational railway track but had incurred considerable debt during the process.

Economic Impact of the Railways

6. Foreign Investment and Employment

   • The arrival of foreign investment, predominantly from Britain, significantly impacted job creation:

     • Vast workforces were needed for the surveying and construction phases of railway projects.

7. Urban Growth

   • The railway's influence contributed to the expansion of urban centers:

     • Railways gravitated towards larger urban centers, creating an increased significance and population within these areas.

     • There was a resultant dominance of cities over smaller towns, as local industries and artisans faced competition from cheaper, railway-distributed urban goods.

     • The proliferation of urban newspapers, such as The Globe and Mail, overshadowed local publications, reducing their influence.

8. Complementing Canal Systems

   • Railways functioned alongside canals, acting as feeder systems.

     • Canals remained the primary means of transporting bulk goods due to lower costs compared to rail transport.

9. Industry Shifts and Growth

   • Railways significantly altered both the nature of manufacturing and the structure of industries:

     • Created a high demand for key materials such as wood, coal, fuel oil, iron, steel, locomotives, and rolling stock (initially imported).

     • Required on-site repair facilities, spurring the development of domestic production capabilities.

     • Stimulated the growth of heavy industries and engineering vital for constructing infrastructure like bridges and tunnels.

     • Fostered the establishment of mills and foundries to support railway operations.

     • The necessity for scheduling led to the establishment of standardized time zones.

10. Pre-Railway Industrialization

    • Before the railway boom, BNA had a diverse range of cottage industries and local ventures, albeit with:

      • Minimal economies of scale at the artisan level.

      • Some local protection from external competition due to high transportation costs.

      • Predominantly smaller operations with less than 20 employees.

    • Colonies exhibited a commercial mindset long before full industrialization.

    • Profits from the commercial class provided necessary savings that later funded industrial ventures.

Development of a Working Class and Tariff Issues

11. Emergence of a Working Class

    • A non-landowning working class emerged between 1840 and 1860.

12. Labour and Employment Concerns

    • Canal work presented challenges due to its labor-intensive yet low-tech nature, raising governmental concerns about unemployment with a permanent workforce.

13. Tariff Policy

    • As manufacturing gained traction, there was a growing demand for protective tariffs against foreign competition:

      • This led to the Galt-Cayley tariff imposed on certain manufactured goods imported from all foreign nations, including Britain (which angered the US, specifically due to the existing Reciprocity Treaty with Canada).

      • These duties resulted in a notable expansion of manufacturing output.

Industrialization in the Maritimes vs. The Canadas

14. Regional Industrial Comparisons

    • In the Maritimes by 1850, industries included shipbuilding, sawmilling, tanning, flour milling, foundries, furniture shops, carriage-making, and breweries concentrated mainly in Saint John, NB.

    • By 1871, New Brunswick matched the Canadas in terms of manufacturing output per capita.

    • A significant difference in industrialization approaches between the Maritimes and the Canadas:

      • In Canada, merchants engaged in industrial activities opportunistically, while in the Maritimes, merchants largely opposed local industrial development.

      • Their resistance stunted industrial progress by roughly 20 years.

15. Economic Development Factors

    • Three pivotal elements characterized Canadian economic thought and growth:

      1. The expansion of railways necessitated a wider financial support framework for governments, while facilitating urban centers’ connections to extensive hinterlands.

      2. The agricultural frontier faced challenges as Canada West became densely populated, with diminishing access to quality Crown land for new settlers and a decline in dominant wheat production.

      3. Canada recognized significant potentials for commercial, financial, and industrial growth dependent on the exploitation of primary resources alongside immigration of both people and capital.